Algerian Turmoil Poses Test for the Region

WITH Haiti, Bosnia, and Rwanda, the Clinton administration has all the foreign policy problems it can handle. But more challenges may be on the way, as a combustible mix of economic hardship, Islamic militancy, and government repression threatens to ignite the North African nation of Algeria.

Algeria was thrown into turmoil in 1992 after the government canceled a second round of parliamentary elections that the country's leading Islamic group, the Islamic Salvation Front (FIS), was expected to win. Since then, the former French colony has been locked in a cycle of Islamic terrorism and government intimidation that has brought it to the verge of civil war. If militant Islam triumphs in Algeria, diplomatic observers worry that the effects could be felt across North Africa and into the Middle East.

``The triumph of the Islamic movement in Algeria would harden other Islamic movements outside the country and increase pressure on other regimes in the region,'' says Shaul Bakhash, an expert on Iran who is a fellow at the United States Institute of Peace.

Diplomatic analysts see two possible futures for Algeria. In the most hopeful scenario, continued government pressure on Muslim militants buys time while assistance from abroad reinvigorates Algeria's feeble economy, dissipating the pressures that nourish discontent.

``I don't think either the government of Algeria or the government of France is going to stand aside and let it happen,'' says former US Ambassador to the United Nations Jeane Kirkpatrick, referring to the possible seizure of power by Islamic fundamentalists. ``They will continue a policy of determined opposition.''

But some say it is too late to keep Muslim fundamentalists out of power. The questions thus are not when, but how soon, political change will take place in Algeria, and whether the spread of Muslim extremism can be contained by providing diplomatic and economic support to the most susceptible countries, including Tunisia and Morocco.

``This government cannot endure,'' says Simon Serfaty, director of European studies at the Center for Strategic and International Studies in Washington. ``Whether through elections or the collapse of the government by force, the FIS will get a share or all of the power.''

Algeria's long, costly, and ultimately successful revolution against French rule, lasting from 1954 until 1962, made it a shining example for the anticolonial movements that swept Africa and Asia after World War II. Paradoxically, the country could become a model of another sort if Islamic militants come to power through violence and not votes.

Events in Algeria invite comparison to Iran, where Muslim extremists overthrew the pro-West government of Shah Muhammad Reza Pahlavi in 1979. But there are differences, Mr. Bakhash notes.

On the face of it, the Algerian regime appears less vulnerable than the Shah's. The opposition has not gotten anywhere near the demonstration of popular support that existed in Iran before the Shah's overthrow. And unlike the Shah, who lost the will to govern after losing US and British backing, Algeria's secular government remains intent on holding power and defeating the fundamentalists.

But while the Shah was buttressed by an expanding economy with rising standards of living, Algeria's leaders have presided over a long economic decline. High inflation, food and housing shortages, and a youth unemployment rate reaching 75 percent have enhanced the militants' appeal.

Iran is different in one other crucial respect. While Iran was a problem for the US, which saw the Shah as an anchor of US interests in the Middle East, Algeria is a problem for France. France retains deep emotional ties to its former colony and is now home to at least 4 million Muslim immigrants, mostly from Algeria.

A PREVALENT worry in France is that an Islamic revolution in Algeria could have devastating consequences, inundating France with Algerian refugees, strengthening the country's right-wing parties, and turning its Muslim immigrant community into a dangerous fifth column.

To shore up the government, France agreed recently to stretch out payment schedules on its loans to Algeria. In another indication of concern, European Union nations pledged last June to consider extending $200 million in additional economic assistance to Algeria.

For the US, the direct stakes in Algeria are relatively small. A handful of US companies, principally in the oil and gas sector, have interests in Algeria. The US Export-Import Bank has provided loan guarantees to US firms operating there. The US Department of Agriculture has extended credits to the government for the purchase of US foodstuffs.

The main US concern is strategic. If the Algerian government were overthrown, militant Islam could spread across North Africa. In the worst but still unlikely case, revolution in Algeria could energize Muslim extremists seeking to overthrow the Egyptian government, with dark implications for the Middle East peace process.

US officials are guardedly optimistic that Algeria's neighbors could weather a storm unleashed by the ascendancy of Muslim extremists. In Tunisia and Morocco, market-oriented economies and more accommodating attitudes toward Islamist movements have provided greater resilience.